Four mistakes of NSW demand management include “reckless” CO2 dump plans, argues Australian Business Council for Sustainable Energy

Posted by gmarkets on 3 September, 2007

Policies and programs to date on encouraging demand management in NSW, but also across every other jurisdiction within Australia, have been inadequately suited to the nature of how energy is consumed and managed, according to the Australian Business Council for Sustainable Energy submission to the Owen Inquiry into Electricity Supply in NSW (June 2007).Four mistakes made: The four mistakes of demand management/energy efficiency policies and programs to date have been:

1. Excessive focus on trying to get network businesses to consider demand management rather than fostering an open market in demand management that is managed outside of network businesses and in competition with them.

2. Seeing this as an information problem that is about educating consumers about energy efficiency without a recognition that these people are completely disinterested and largely unconcerned with energy costs and hence will not pay heed to the information.

3. Seeking demand management services through tendering processes that are highly costly and uncertain for proponents, rather than through transparent price signals that offer set prices for saved kW and saved kWh. Energy efficiency and demand management is about small gains per intervention (e.g. a more efficient fridge or light or building) but very large numbers of interventions (there are millions of fridges, lights and buildings). This is not suited to tendering programs which involve quite significant administrative costs.

4. Failure to appreciate the primary role of businesses that supply energy-related equipment and services and not structuring programs around creating incentives for them to care about energy efficiency. A commitment by the NSW Government to a large coal-fired power station without a very good understanding of the feasibility and cost to capture and store the greenhouse emissions from such a plant would be financially reckless. At present we lack that understanding.

CO2 dumps: “The NSW Government has committed funds to a project to identify potential sites in NSW that could be used for substantial storage of carbon dioxide (50 million tonnes per annum) but as yet it has produced no results. Making decisions on coal-fired power plants before that study has been completed is very unwise, especially when previous studies by Geosciences Australia have failed to identify feasible storage sites nearby to NSW coal fields and generators. Large, private-sector companies active in the Australian energy market, including Origin Energy, AGL and TruEnergy have all ruled out building a conventional coal-fired power station because such a plant represents an unacceptable financial risk for their shareholders due to their high greenhouse emissions (see news articles attached to this submission).

Govt coal-subsidies: “The only recent example of where a private sector operator has committed to a new coal-fired power station (HRL’s 400MW plant in the LaTrobe Valley) involves a $140m subsidy from the Federal and Victorian Governments. And the plant will be a carbon capture ready coal gasification plant located nearby to an oil and gas field that is expected to be suitable as a storage site for CO2 emissions,” the submission added.